Cash has always been one of the most valuable assets for startups, and is a stress point for every founder at some point in their growth journey. However, the conversation among founders is often focused on VC money.
Interestingly, most of the growing and successful startups we’ve worked with have either been:
a) Bootstrapped, often from a previous successful business sale
b) Backed by private investors
c) Funded by a grant
Of these, the most overlooked source of funding are government grants. The general perception is that they’re slow and a lot of work. Indeed they are, but grants can also be a great way of accessing sorely needed funding without having to sacrifice equity.
In 2018, we received $250,000 in funding via LaunchVic to roll out a free 10-part masterclass series teaching Melbourne founders how to build sustainable businesses through practical product design, development, and management. Over 400 people participated in the program, which wouldn’t have been possible without the grant.
LaunchVic was established by the Victorian government to support the growth of local startups.
From the idea phase to commercialisation and through to growth, grants can be a great resource to seek funding for the right startups. As well as a money infusion, there’s also assistance in the form of low-interest loans, workshops, mentoring, training, subsidies, tax benefits, allowances and much more, depending on the type of help you need.
What you need to know about government grants for startups
- You could be eligible for grants at the federal, state, city or industry level (or all of them)
- Government grants are generally for specific projects, not a business in general.
- You need a specific plan to be eligible, not just a general business idea, so they’re ideal for scaling your product, rather than those at the ideation phase.
- Most grants are for things like expansion, hiring, training, research and development, importing and exporting, or commercialising a specific product.
- As well as just cash, there’s also various free and low-cost business advisory services, financial and tax advice, loans and other support available.
- Government grants are free to apply for, so don’t ever pay a fee, or you’re being scammed. You might want to engage a professional grant writer, but don’t pay to lodge an application.
Applying for grants can be time consuming, so make sure you are selective about which applications are most suitable.
Top tips to get approved for a government business grant
- Tailor your application for each specific grant you apply for. Each one has different criteria, so your application needs to address each specific application question.
- If you’re planning to apply for multiple grants, have grant strategy so you know what you’re applying for at what time. We know from experience that grant applications can take a lot of time and effort to pull together, so don’t bother applying for ones you’re unlikely to get.
- Apply for a project, rather than your business as a whole. Most grants are awarded for specific business activities such as product development, market expansion and recruiting or training staff. For a tech startup, this might be focused on bringing a new product to market, or on job creation – a good idea isn’t good enough.
- Be succinct yet thorough with your answers. If you’re unsure how to answer a question or don’t have the answer, it usually means you’re not ready. Rather than guessing or leaving it blank, make sure you get informed.
- If you’re not successful, ask for feedback so you can learn and improve for next time.
There are over 1500 government grants and assistance opportunities available for Australian businesses at the time of writing this, worth billions of dollars in total, each with specific eligibility requirements. They exist on a federal, state, city and industry level, and some are open all the time while others have script open and close dates.
To go into each of them would be both tiring, and quickly outdated, so instead we’re highlighting some more broadly relevant and industry-agnostic federal ones for startup founders, and where to sign up for email updates, so you don’t miss out on new openings.
The R&D Tax Incentive was designed to help businesses who are ‘conducting innovative and experimental activities’ in order to create novel products and processes in the science and technology space.
In short, it allows startups and SMEs to claim a refundable tax offset for the costs associated with their eligible R&D activities. This means that if your business is running at a loss-making position, you could receive your tax offset as a cash rebate. The current value of the tax offset for eligible businesses is 43.5%, which means if you’re running at a loss and have spent $100,000 on eligible activities, you could potentially receive $43,500 in cash.
For more info on the R&D Tax Incentive, check out https://www.business.gov.au/assistance/research-and-development-tax-incentive
Although we’re advocates for ongoing R&D, the next natural big step in the startup journey is figuring out how to successfully get your product to market. That’s where the AC Grant fits in nicely.
This competitive grant offers up to $1,000,000 in matched funding to help with the commercialisation of new products or processes into new markets.
For more info and full eligibility criteria, check out https://www.business.gov.au/Assistance/Entrepreneurs-Programme/Accelerating-Commercialisation
Designed for businesses that have gone through the government’s Entrepreneurs’ Programme Business Management advice or facilitation service, this offers to cover up to 50% of eligible costs aligned to rolling out a recommendation, capped at $20,000 (excluding GST).
As an example, you’re part of the Entrepreneurs’ Programme and an advisor has recommended specific business improvement activities. It will cost $40,000 to engage external expertise (like us here at Cogent) to help you implement these recommendations. In this scenario, you may be eligible for $20,000 of that cost to be covered by this grant.
For more info and full eligibility criteria, check out https://www.business.gov.au/Assistance/Entrepreneurs-Programme/Business-Growth-Grants
How to stay informed
The simplest and easiest way to stay in the loop about what grants are available and when, is to sign up for a handful of helpful emails newsletters.
Grant Guru – federal grants, as well as non-government opportunities.
Keen to know how Cogent can help with your startup? Find out more about our services.